DCF Studio

    ITRK.L · LSE · Industrials

    Intertek Group plc

    Also onConsensus Drift

    Implied value per share

    GBp 26722.37

    Market price

    GBp 5865.00

    Implied upside

    +355.6%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Wrong toolThis line has no market capitalisation, which means it is not ordinary shares - typically a hybrid, preference line, note or unlisted stub. A discounted cashflow values a claim on the whole business, so applying it here attributes all of the group’s revenue to a security that has no such claim. Its value is its coupon and call schedule. Look up the ordinary line instead.
    NoteRisk-free rate is an assumption: GBP assumption - no free live source available for this market.

    No usable EV/EBITDA (EBITDA is not positive), so the exit multiple falls back to 8x.

    Value Per Share

    Perpetuity growth
    GBp 26722.37+355.6%
    Exit multiple
    GBp 4210.06-28.2%
    Market price
    GBp 5865.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (GBP). Outflows negative.

    0m267m535mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayGBP
    LineFY26FY27FY28FY29FY30CAGR
    RevenueGBP 3.5bnGBP 3.6bnGBP 3.7bnGBP 3.8bnGBP 3.9bn+2.4%
    EBITGBP 530.5mGBP 543.4mGBP 556.6mGBP 570.1mGBP 584.0m+2.4%
    NOPATGBP 397.9mGBP 407.5mGBP 417.4mGBP 427.6mGBP 438.0m+2.4%
    Add depreciation & amortisationGBP 216.8mGBP 222.0mGBP 227.4mGBP 233.0mGBP 238.6m+2.4%
    Less capital expenditureGBP -134.9mGBP -138.2mGBP -141.5mGBP -145.0mGBP -148.5m+2.4%
    Less increase in working capitalGBP 5.9mGBP 6.0mGBP 6.2mGBP 6.3mGBP 6.5m-2.4%
    Free cashflow to firmGBP 485.6mGBP 497.4mGBP 509.5mGBP 521.9mGBP 534.6m+2.4%
    Discount factor0.98350.95140.92040.89030.8613-
    Present valueGBP 477.6mGBP 473.3mGBP 469.0mGBP 464.7mGBP 460.5m-0.9%
    Present Value Of The ForecastGBP 2.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.50%GBP assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.977Reported 0.966, pulled toward 1.0 (Blume)
    Cost of equity9.87%Risk-free + beta x equity risk premium
    Cost of debt4.50%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationGBP 0.000.0% of capital
    Total debtGBP 1.6bn100.0% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC3.38%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareGBP 267.22

    95% of EV

    Forecast FCFF, final year
    GBP 534.6m
    Capex at depreciation, working capital in reinvestment
    GBP 483.8m
    Less reinvestment at g/ROIC (15.1% of NOPAT)
    GBP -72.8m
    Capitalised
    GBP 411.0m
    ROIC (reported)
    16.6%
    Terminal value, undiscounted
    GBP 48.1bn
    Terminal value, discounted
    GBP 41.5bn
    Enterprise value
    GBP 43.8bn
    Less net debt
    GBP 1.3bn
    Equity value
    GBP 42.5bn

    Exit at 8.0x EBITDA

    Value per shareGBP 42.10

    71% of EV

    Terminal value, undiscounted
    GBP 6.6bn
    Terminal value, discounted
    GBP 5.7bn
    Enterprise value
    GBP 8.0bn
    Less net debt
    GBP 1.3bn
    Equity value
    GBP 6.7bn

    Spread between methods: 146%.

    Sensitivity

    Value per share (GBP) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    1.38%—————
    2.38%295.71661.81———
    3.38%135.50177.44267.22596.21—
    4.38%86.70100.90122.64160.13240.38
    5.38%63.0669.6878.5891.20110.51

    Outlined: this model. Green text: above today's price of 58.65. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year2.4%-23.3%-25.7pp
    EBIT margin15.1%2.4%-12.7pp
    Discount rate3.4%6.3%+2.9pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.